1. Measuring the Monetary
Value of Social Relations:
a Hedonic Approach
By:
Bogatkina Maria
Illarionov Alexander
Mkrtchyan Liana
Vagin Andrey
!
10th April 2014

2. Table of content
1. Introduction
2. Data
3. Methods
4. Results
4.1. The Monetary Price of Social Relations
4.2. Monetary Index of Quality of Relational Life
4.3. Quality of Relational Life and Subjective Well-Being

3. Introduction

4. Focus on economic value
of social relations
The first application based
on hedonic prices, to obtain
a direct measurement
of the monetary value
of social relations.

5. Indicators
time spent with friends
active participation in associations
frequency of going out for leisure activities

6. Find
Households are willing to pay
a positive and significant
monetary price to live in cities
where people spend
more time with their friends.

7. Use
The estimated amenity prices
to construct a monetary index
of quality of relational life
and compare it with other
dimensions of overall quality
of life.

8. Examine
The relationship between
quality of life and subjective
well-being, in order to assess
the consistency between
objective and subjective
measures of well-being.

9. Data

10. Sample
based on 4 micro-level data sets covering
103 Italian provinces on an annual basis
between 2001 and 2010
focus on cities defined as the municipalities
of province capitals
information on social relations
and local amenities
information on the housing
market and the labor market

11. Descriptive statistics, social relations
(individual level)

12. Indicators of social relations, by city

13. Descriptive statistics, amenities (city-level)

14. Methods

15. Methodology
The monetary value of social
relations can be estimated
by looking at the effects
of relational amenities
on house price and wage
differentials across cities.

16. Results

17. The Monetary Price
of Social Relations

18. Increase real house prices
high frequency of meetings with friends
increase in the percentage of individuals who participate actively
in volunteering activities
in cities with higher temperature, lower humidity and lower
average precipitations
in cities with higher teacher-pupil ratio, better transport
and cultural infrastructure
in cities located on the coast, with less pollution and more green
areas
in cities with lower crime and unemployment rates and higher
population density

19. Full implicit prices of amenities
(euro per year)

20. Findings
the implicit prices from the housing equation
are generally substantially larger than those
from the wage equation
beneficial amenities have positive monetary
prices (temperature in January, coastal location,
green areas, transport and culture infrastructure,
urban density)
while the opposite holds for dis-amenities
(precipitation, humidity, air pollution, crime
and unemployment)

21. Monetary Index of Quality
of Relational Life

22. Calculation
A monetary index of quality
of relational life (QoRL)
for Italian cities is obtained
by multiplying the value
of each relational amenity
in each city
by the corresponding
full implicit prices.

23. Monetary index of quality of relational life

24. The most of big cities
are in the bottom of list
Rank City Index
1 Ascoli Piceno 3879
71 Bologna -657
80 Milan -887
81 Turin -904
82 Bergamo -923
89 Florence -1124
99 Rome -1492

25. Quality of Relational Life
and Subjective Well-Being

26. Quality of Relational Life
and Subjective Well-Being
• the QoL index for society, that includes crime rate,
urban density and unemployment rate, is positively
and significantly related to high satisfaction with life
• satisfaction with the environment is significantly lower
in cities where the quality of services is higher
• satisfaction with economic conditions is lower where
the quality of the environment is higher
• the quality of relational life index is positively
and significantly associated to satisfaction with health
and, most importantly, to satisfaction with relations
with friends

28. References
Colombo E., Stanca L., Measuring the Monetary
Value of Social Relations: a Hedonic Approach,
2013